Real estate sector is one of the important pillars of the economy. The sector has grown significantly however it has no regulator like of other sectors in telecom, insurance, stock market etc. There was need to provide the transparency and accountability in real estate sector. The act provides protection to home buyers and boost investments in real estate sector. The lack of standardisation has been a constraint to the healthy and orderly growth of industry. Therefore there was need for regulating the sector since long time.
The act was enacted with the aim at protecting the rights and interests of consumers. It also aims for promotion of uniformity and standardization of business practices and transactions in the real estate sector. It attempts to balance the interests of consumer and promoters by farming the certain responsibility on both.
REGISTRATION OF REAL ESTATE PROJECT
Many buyers of real estate rush for the opportunity to book in the pre-launch project as they get discounted prices. Earlier these pre-launching a project was without securing requisite approvals for the project from local authorities. But if pre-launch project is from a developer who is unscrupulous or a fly by night operator then it carries a great risk. The RERA provides the transparency and accountability in the real estate sector. Its main objective is to provide the information regarding the status of building approvals to enable customers to make accurate decisions.
The act provides that a promoter shall not advertise, market, book, sell or offer for sale in any manner any real estate product in any real estate project without registering the real estate project with Real Estate Regulatory Authority i.e. RERA.
The act provides that on-going projects on the commencement of this act shall make an application for registration of the project. Further authority may also in the interest of the allottees direct the project to be registered with the authority.
EXEMPTION FOR REGISTRATION OF PROJECT
The following projects do not require to be registered under the Act:
- Area of land does not exceed 500 Sq. Meters
- Number of apartments does not exceed 8
In case of Renovation/ Repair/Re-development
(a) where the area of land proposed to be developed does not exceed five hundred square meters or the number of apartments proposed to be developed does not exceed eight, inclusive of all phases;
(b) where the promoter has received completion certificate for a real estate project prior to commencement of this Act;
(c) renovation or repair or re-development projects which does not involve marketing, advertising selling or new allotment of any apartment, plot or building, as the case may be, under the real estate project.
FEATURES AND ADVANTAGES
Every promoter has to make an application for registration of project to the authority as per prescribed form. The promoter has to provide the information about the enterprises, details about the past projects, an authenticate copy of approvals, sanctioned plan, details about the facilities / amenities of the project, location details, proforma of agreements and allotment letters etc., area details and carpet area etc.
The promoter has to keep about 70% of the received amount in escrow account. The promoter can withdraw the amount as per certificate of engineer or architect. The account has to be audited within six months. The authority shall provide the web based online system for submitting the applications.
On receipt of the application the authority shall decide the application within 30 days from the receipt of the application. The registration granted shall be valid for a period declared by the promoter for completion of the project or phase. Delay in handing over the project within stipulated time frame is a great misfortune of the buyer. Hence at the time of registration a developer has to specify a time line during which the project will be complete and handover to the buyer. The section 6 provides that, an extension of registration shall be granted at the sole discretion of regulator due to force majeure condition.
As per the provisions of RERA the developer cannot change the plan. And if a builder is found guilty of this he /she will be penalized with 10% of the project costs or face jail up to three years.
The act provides that, if buyer found that there is structural deficiency in the development of the building then the buyer can contact the builder after the purchase of the flat. However the buyer has to approach the developer within one year of purchase for rectification of defect.
DISADVANTAGES
The main disadvantage of the law is it does not cover the past projects. The projects which are on-going / completed or stuck due to clearance or financial issues are not covered under the RERA. Therefore many buyers may not get the protection under the RERA.
Registration with the regulator will not be mandatory for projects less than 500 sq. meters or has less than 8 apartments. So small developers will not be bound to register with the regulator.
As the project will not be allowed to launch without the requisite clearances from the government departments therefore there is apprehension that project will automatically get delayed.
CONCLUSION
Hence the RERA is offering the greatest protection to the real estate buyer. It provides the platform where all the information about the real estate project is provided. The buyer can rely upon this information and take decision for buying. It also provides the protection to the existing buyers of existing projects by imposing penalties and imprisonment.